Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2010
 

Tax on Insurers Law

Chapter 5. Payment and Collection.

Article 1. Generally

Section 12602

12602. Electronic funds transfer. (a) (1) On and after January 1, 1994, and before January 1, 1995, each insurer whose annual taxes exceed fifty thousand dollars ($50,000) shall make payment by electronic funds transfer, as defined by Section 45 of the Insurance Code. On and after January 1, 1995, each insurer whose annual taxes exceed twenty thousand dollars ($20,000) shall make payment by electronic funds transfer. The insurer shall choose one of the acceptable methods described in Section 45 of the Insurance Code for completing the electronic funds transfer.

(2) Each Medi-Cal managed care plan shall make payment by electronic funds transfer, as defined by Section 45 of the Insurance Code. The plan shall choose one of the acceptable methods described in Section 45 of the Insurance Code for completing the electronic funds transfer.

(b) Payment deletionshall be deemed complete on the date the electronic funds transfer is initiated, if settlement to the state's demand account occurs on or before the banking day following the date the transfer is initiated. If settlement to the state's demand account does not occur on or before the banking day following the date the transfer is initiated, payment deletionshall be deemed to occur on the date settlement occurs.

(c) (1) Any insurer or Medi-Cal managed care plan required to remit taxes by electronic funds transfer pursuant to this section deletionthat remits those taxes by means other than an appropriate electronic funds transfer, shall be assessed a penalty in an amount equal to 10 percent of the taxes due at the time of the payment.

(2) If the Department of Insurance finds that an insurer's or Medi-Cal managed care plan's failure to make payment by an appropriate electronic funds transfer in accordance with subdivision (a) is due to reasonable cause or circumstances beyond the insurer's or Medi-Cal managed care plan's control, and occurred notwithstanding the exercise of ordinary care and in the absence of willful neglect, that insurer or Medi-Cal managed care plan shall be relieved of the penalty provided in paragraph (1).

(3) Any insurer or Medi-Cal managed care plan seeking to be relieved of the penalty provided in paragraph (1) shall file with the Department of Insurance a statement under penalty of perjury setting forth the facts upon which the claim for relief is based.

(d) This section shall remain in effect only until January 1, 2011, and as of that date is repealed.

History.—Added by Stats. 1993, Ch. 661, in effect January 1, 1994. Stats. 1995, Ch. 721, in effect January 1, 1996, added "on or" after "demand account occurs" in the first sentence of subdivision (b); substituted "insurer" for "person" after "Any" in paragraph (1) of, and substituted "an insurer's" for "a person's" after "Insurance finds that", substituted "payment by an . . . with subdivision (a)" for "a timely payment" after "failure to make", substituted "insurer's" for "person's" after "circumstance beyond the", and substituted "that insurer" for "the person" after "of willful neglect," in paragraph (2) of, substituted "insurer" for "person" after "Any", added "with the Department of Insurance" after "(1) shall file", and substituted "claim for relief is based" for "person bases his or her claim for relief with the Department of Insurance" after "upon which the" in paragraph (3) of, subdivision (c). Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, substituted "(a)(1)" for "(a)" and added paragraph (2) in subdivision (a); substituted "shall be" for "is" twice in subdivision (b); substituted "that" for "who" after "pursuant to this section" in paragraph (c) (1); added "or Medi-Cal managed care plan" in paragraphs (c)(1) and (c)(3); added "or Medi-Cal managed care plan's" twice in paragraph (c)(2); and added subdivision (d).

Text of section operative January 1, 2011

12602. Electronic funds transfer. (a) On and after January 1, 1994, and before January 1, 1995, each insurer whose annual taxes exceed fifty thousand dollars ($50,000) shall make payment by electronic funds transfer, as defined by Section 45 of the Insurance Code. On and after January 1, 1995, each insurer whose annual taxes exceed twenty thousand dollars ($20,000) shall make payment by electronic funds transfer. The insurer shall choose one of the acceptable methods described in Section 45 of the Insurance Code for completing the electronic funds transfer.

(b) Payment shall be deemed complete on the date the electronic funds transfer is initiated, if settlement to the state's demand account occurs on or before the banking day following the date the transfer is initiated. If settlement to the state's demand account does not occur on or before the banking day following the date the transfer is initiated, payment shall be deemed to occur on the date settlement occurs.

(c) (1) Any insurer required to remit taxes by electronic funds transfer pursuant to this section that remits those taxes by means other than an appropriate electronic funds transfer, shall be assessed a penalty in an amount equal to 10 percent of the taxes due at the time of the payment.

(2) If the Department of Insurance finds that an insurer's failure to make payment by an appropriate electronic funds transfer in accordance with subdivision (a) is due to reasonable cause or circumstances beyond the insurer's control, and occurred notwithstanding the exercise of ordinary care and in the absence of willful neglect, that insurer shall be relieved of the penalty provided in paragraph (1).

(3) Any insurer seeking to be relieved of the penalty provided in paragraph (1) shall file with the Department of Insurance a statement under penalty of perjury setting forth the facts upon which the claim for relief is based.

(d) This section shall become operative on January 1, 2011.

History.—Added by Stats. 2009, Ch. 157 (AB 1422), in effect September 22, 2009, but operative January 1, 2011.